Retrial of the trademark infringement and unfair competition case: Guangzhou Star River Industrial Development Co., Ltd. & Guangzhou Hongfu Real Estate Co., Ltd. vs. Jiangsu Weifu Group Construction & Development Co., Ltd. [Supreme People’s Court, (2013) Min Ti Zi No. 102 Civil Judgment]

Case Summary

Guangzhou Hongfu Real Estate Co., Ltd. (Hongfu) is the owner of No. 1946396 (registered on September 28, 2002) and No. 1948763 (registered on September 21, 2003) combination trademarks (“Star River in Chinese character and device”), designated to be used respectively on the services of “real estate rental, real estate management” etc. in Class 36 and “architecture” etc. in Class 37. Hongfu later assigned the trademarks to Guangzhou Star River Industrial Development Co., Ltd. (Star River Co.) Star River Co. licensed Hongfu to use the aforementioned trademarks, authorizing Hongfu to bring infringement actions in its own name. Hongfu and its affiliated companies developed several “Star River” real estate projects in Guangzhou, Beijing, Shanghai and other cities, winning many awards.

Starting in 2000, Jiangsu Weifu Group Construction & Development Co., Ltd. (Weifu) launched various real estate projects using the names “Star River Garden,” “Star Garden”, “Star Scenery Garden,” in Nantong city of Jiangsu province. The names of these apartment buildings were approved by the Municipal Civil Affairs Bureau of Nantong.

Star River Co. and Hongfu sued Weifu on the ground of trademark infringement and unfair competition.

The intermediate people’s court of Nantong city ruled that Weifu’s using of “Star River Garden” as the name of its apartment buildings did not constitute trademark infringement since it did not mislead consumers as to the developer of the building. The first instance court further found that since Weifu had no intention of free-riding and its action did not cause misidentification among consumers, Weifu’s act did not constitute an act of unfair competition. The court therefore dismissed the claim of Star River Co. and Hongfu.

Star River Co. and Hongfu appealed to the High People’s Court of Jiangsu Province, which upheld the first instance judgment.

Star River Co. and Hongfu then filed a retrial application to the Supreme People’s Court (SPC). The SPC determined that Weifu’s using of the name “Star River Garden”, which is similar to the cited marks, as the name of its apartment buildings, was likely to cause confusion and misidentification among the relevant public, which constituted infringement of the plaintiff's marks. Consequently, the SPC overruled the first and second instance judgment, concluding that Weifu must not, in the future, use “Star River” as the name for buildings yet to be developed and sold and that it shall compensate Star River Co. and Hongfu 50,000RMB for their economic loss.

Significance

The case gathered a lot of social attention since it pertains to the protection of trademarks registered for real estate sale services and the liability after a court has determined the existence of an act of infringement. The Supreme People’s Court clarified in its retrial that when an intellectual property right such as trademark is in conflict with a property right, whether the parties shall be ordered to stop using the trademark shall be based on the principle of good faith and by taking into account the public interest. The case took into consideration that the name of Weifu’s apartment building had been approved by the local Civil Affairs agency. In addition, residents had been living in the complex for many years and there was no evidence to prove whether the residents knew, upon their initial purchase, that the name of the building infringed upon the cited trademarks. Terminating the use of “Star River” completely would have created a misbalance in the interests of the trademark owner and of the public/residents. As a result, the SPC did not sentence a complete prohibition to use the building name, but ruled that buildings yet to be developed and sold must not use the name. Such verdict protected the trademark owner’s interests to the extent allowed by the law while minimizing the harm against public order and interest, highlighting the significance of the judicial guidance.

WAN HUI DA Comments:

The fact that the infringing "products" are buildings, sold piece by piece in the form of apartments, creates a very special situation where the final product (the apartment) does not bear the infringed trademark, and where the buyer may not have been aware that infringement was committed. This being said, in order to assess the significance of this decision, one should know what were, exactly, the claims formed by the plaintiffs. If they asked the first and second instance courts to affirm the existence of the infringing act, to order the cessation of such acts and to compensate the prejudice caused, the SPC decision did exactly that. It was not necessary to rule beyond. If the plaintiffs asked the courts to order the modification of all the buildings' names already sold, then, the SPC dismissed the plaintiff's claims in that respect, and this decision may be questioned. The Trademark Law does not (as does the Patent Law) contain any reference to the public interest. On the contrary, it is in the interest of the consumers not to be confused by an act of infringement (which may well happen if the owner of one of the "infringing apartments" decides to resell).